Shanghai was ranked the most competitive city in China in terms of company performance, talent pool and business environment, according to a recent report.

The Social Sciences Development Publishing House surveyed 200 cities on economic status and development potential. Shanghai topped the list, followed by Beijing, Shenzhen and Guangzhou.

Shanghai's companies outranked the performance of firms elsewhere as the booming local economy attracted foreign fund and created large demand.

"The entrepreneurs are more confident in large-scale economy, and willing to put in their investment," said Yao Junwu, general secretary of Shanghai Entrepreneurs' Association. "Large cities usually have more active spending."

However, the city still faces problems including lack of innovation and inefficient management, the report showed.

"Although Shanghai has pooled talents from both home and other provinces. But some students with master's degrees are unable to do practical work and make success in the job market," said Mu Jianming, a Tongji University chemistry department official who is in charge of the student affairs.

"They cannot use their advanced knowledge to build up their own companies," he said.

Meanwhile, Shanghai, together with large cities like Beijing and Guangzhou, are suffering from high business cost, including spending on labor and land.

"As the property prices surge, companies have to pay more for office and factory rent," said Gu Jianfa, researcher of Shanghai Academy of Social Sciences. "Small players may resort to secondary cities with lower demand for capital."

(eastday.com May 11, 2004)